Proof was provided Tuesday thanks to an eloquent speech by Bank of Italy Governor Ignazio Visco.

The word “borgo” – “Burg” in its modern German declinations – in Italy has since the beginning meant a human settlement built up outside of a city’s early protective walls. In short, it intrinsically meant something that was peripherical, the governor noted.

In Germany, meanwhile, the term came to meant the city itself. Think Hamburg. Indeed, from the 12th century on in Germany the word represented the center of feudal power. In Italy, though, it kept its original sense of something more popular, a counterpoint to the lord’s castle.

So Mr. Visco said during the launch of a photography book of Italy’s rural scenography.

And he didn’t stop there.

Italy, he said, was characterized by a process of “industrialization from below,” based on small companies operating in industrial clusters or districts. Cooperation was key, “even though the meaning here is usually described by cold-blooded economists as the reduction of transaction costs,” Mr. Visco said.

Industrial districts were a motor to Italy’s postwar economic boom.

But in the past decade or two they have become a bit of a burden, as their interlinkages don’t easily allow for outsourcing of some phases of production to lower-cost areas, nor do the small size of individual firms permit much in the way of investment in intangibles such as human capital and more efficient use of information technology. In short, modern growth is metropolitan.

Mr. Visco is sympathetic to his country’s version of the ‘borg’ though, suggesting more be invested in their maintenance

He was a bit more stern with the local banks, though. These cooperative outfits greatly increased their lending volumes during the first decade of the euro and are now struggling with deteriorating credit quality. This year, for the first time since the euro area debt crisis began, their solvency ratios began showing signs of wear and tear, he added.

They need to adapt and the best way to do so is to exploit their local ties and fund efforts aimed at shoring up their community’s heritage.